Flanagan ousted as chief of Scottish Media Group

Andrew Flanagan, the chief executive of SMG for the past decade, has resigned with immediate effect after the company's board decided a fresh pair of hands was needed to take the Scottish media company forward.

Mr Flanagan has been replaced by Donald Emslie on an temporary basis. Mr Emslie, the head of SMG's television business, is a strong internal candidate to take over from Mr Flanagan and has been on the company's board for seven years.

A company spokesman said SMG would begin its search for a new chief executive immediately and would consider internal and external candidates.

A brief statement, which contained no comment from Mr Flanagan, said he had left "by mutual agreement with the board". He will quit with a pay-off of more than £500,000 which accounts for one year's salary plus bonus and pension benefits.

Patrick Yau, at Bridgewell Securities, said: "We see nothing unduly sinister in the announcement and await the outcome of the recruitment with interest."

Mr Flanagan joined the company as finance director in 1994. He survived a turbulent period in SMG's history in the early part of this decade. During the dot.com boom, SMG went on a spending spree but massively overpaid for assets including Chris Evans' Ginger Media, Heart of Midlothian Football Club in Edinburgh and the radio company SRH. A downturn in advertising spend caused the company to breach its banking covenants in 2001 forcing it to sell off assets, including The Herald newspaper group, to cut debt.

SMG has reported stronger results more recently and is looking to focus on its remaining key brands and its digital strategy. It owns Virgin Radio, the STV television franchise in Scotland and the cinema advertising company Pearl & Dean. In 2005, SMG reported a 46 per cent rise in pre-tax profit to £20m with revenue 4 per cent ahead at £210m.

Chris Masters, SMG's chairman, thanked Mr Flanagan for an "outstanding contribution to the development of SMG in his 10 years as chief executive". He said Mr Flanagan had helped restructure the group and position it for future growth.

SMG wants to reinvigorate its brands and focus more on online growth. It launched a Pearl & Dean consumer website in February and relaunched the STV website yesterday. SMG plans to relaunch its Virgin Radio websites in September.